The European Central Bank announced that after convening on Monday it decided to increase the provision of emergency liquidity to Greece via its ELA mechanism. As with Friday’s decision, the ECB did not announce the extent of additional funding.
In its statement, the ELA noted that it would carry out a teleconference and convene, echoing an earlier statement by the president of the European Central Bank Mario Draghi, who underlined that so long as there is a chance of an agreement, Greece will continue to receive support from the bank.
Although there has been no panic or queues outside banks, about 4.5 billion euros were taken out of bank accounts last week, with banking officials warning that unless an agreement is reached soon, then the situation will get worse.
Meanwhile, the President of the National Bank of Greece Louka Katseli gave an interview to the BBC, where she highlighted the importance of the provision of emergency liquidity to the Greek banking system. Mrs. Katseli warned that an agreement was necessary in order to put an end to the uncertainty, otherwise there is a real possibility of a default. Nevertheless, she was optimistic that an agreement will be reached.
On the other hand, Goldman Sachs estimates that a technical default for Greece is the likeliest scenario, with the Greek government issuing IOUs and introducing restrictions on bank withdrawals, but remaining in the Eurozone. The investment banking firm does not rule out any further actions to promote discussions until a final agreement can be reached.
